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Unit-28: Economics of Risk and Uncertainty

Now, suppose that according to casino rule, get bet of 30 or not any. In this situation the bet of 30/- Notes
points A goes to C which is not favourable for him because it is situated below its neutral curve. He will
not take risk of 30 for profit of 90 and get refused to take set. Therefore, risk averse persons, even
probability is in their favours, will take gambling.

28.4 Summary

• Behaviour of a man to risk depends on his selection and expected profit received by them. Generally, it
is expected that with great risk there will more profit. Any individual decision shows their behaviour
and risk taken by them and risk ability are different in each person. Some people like to take risk.
Some oppose to take risk and some keep neutral to risk. Those who take risks expect to get more
return, profit, income and prices.

28.5 Keywords

• Probability: Possibility
• Expected Value: Expected value in money

28.6 Review Questions

1. What should the behaviour of a consumer for risk?
2. What is Risk Preference? Explain it.
3. Express your opinion about Gambling.

Answers: Self Assessment

1. Fundamental 2. Uncertainty 3. Measured 4. (a)
5. (b) 6. (a) 7. (a) 8. True
9. True 10. False.

28.7 Further Readings

1. Microeconomics: An advanced treaties—S.P.S Chauhan, PHI Learning.
2. Microeconomics: Behaviour, Institutions and Evaluation— Sampoole Bowels, Oxford
University Press, 2004.
3. Microeconomics: Principals, Applications and tools— Sanjay Basotiya, DND Publications,
2010.

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